Pearl Diver Capital is planning the final close of its CLO investment fund, PDC Opportunities IV, at $150 million, in the next couple of months, according to Matthew Layton, partner at the firm. A first close took place towards the end of February. The fund has a 12-month investment window, and has already started to invest.
Unlike previous CLO investment funds, this latest offering can invest in both U.S. and European primary CLOs, and it can also offer warehouses. Historically the manager has invested towards the bottom end of CLO structures, but it can invest across the structure depending on where the value is, Layton said.
The move to invest in the European CLO space is due partly to the re-emergence of this market over the past 12 months, but is more related to the better economics available in the European CLO market versus the U.S. “The economics, both on a relative and absolute value basis, are debatably better in Europe,” Layton said. “However Europe still has issues around loan concentration, allocation and a lumpy loan pipeline, and it just doesn’t have the breadth and depth of the U.S. market.”
Pearl Diver Capital was formed in 2008 to provide institutional investors with specialized investment expertise in the securitized products market, and manages roughly $400 million across its fund strategies.